U.S. probe accuses aircraft parts supplier of fraud

WASHINGTON (Reuters) - A U.S. Army investigation accuses a major supplier of providing bogus materials to “every aircraft manufacturer in the world” for nearly a decade, an independent government watchdog said on Thursday, citing an Army memo obtained by the group.

The September 2006 memo alleged that in addition to selling sub-standard materials, Airtech International Inc paid bribes and kickbacks and threatened the safety of both civilian and military aviation, according to the Project on Government Oversight (POGO).

A four-year investigation found that from January 1997 through December 2005, Airtech knowingly supplied nonconforming products to Defense Department prime contractors, POGO said, quoting the memo written by investigators.

“Airtech at its own discretion, routinely changes the composition, the manufacturer or the manufacturing process of products with disclosure to its customer, which in most cases would require requalification of the product,” the memo read.

The investigators said such changes could result in the loss of parts or safety issues if the part is used.

“Seldom have I come across a company with such brazen disregard for the safety of soldiers and civilians as well as for the sanctity of laws, regulations and rules,” an Army criminal investigator wrote in the memo.

CBS News, which also obtained a copy of the September 2006 memo, said Airtech dominates the market for the raw materials used to build “composites” -- layers of high-tech plastics used to replace critical metal parts in the wings, engines and fuselage in many planes.

Headquartered in Huntington Beach, California, Airtech has been a supplier to defense contractors who make the C-17, F-18 and Joint Strike Fighter aircraft for the U.S. Air Force, according to POGO. The company also has facilities in Luxembourg, China and Britain.

The Army memo recommends that the Air Force “take action against Airtech to protect Department of Defense interests,” POGO said.

A spokesman for Airtech did not immediately return calls seeking comment.

In a statement to CBS, Airtech said: “We are aware of no current ongoing investigation” and that it has “fully cooperated” with the government.

Airtech said it considered “the matter closed,” citing a November 2006 letter from the Federal Aviation Administration, which did its own investigation and found no violation of federal regulations, CBS reported.

The U.S. House of Representatives Transportation committee is currently looking into the Airtech issue.